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Phoenix New Media Ltd Brands, Inc. (FENG) CEO Shuang Liu on Q4 2021 Earnings Call Transcript

todayMarch 15, 2022

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Phoenix New Media Ltd Manufacturers, Inc. (NYSE:FENG) This autumn 2021 Earnings Convention Name March 14, 2022 9:00 PM ET

Firm Contributors

Shuang Liu – CEO

Edward Lu – CFO

Convention Name Contributors

Xueru Zhang – 86Research

Alice Tang – First Shanghai

Operator

Good day and thanks for standing by. Welcome to the Phoenix New Media Fourth Quarter 2021 Earnings Name. Presently, all individuals are in a listen-only mode. After the audio system’ presentation, there might be a question-and-answer session. [Operator Instructions]. Please be suggested that as we speak’s convention is being recorded. [Operator Instructions]

I might now like handy the decision over to your first speaker as we speak, Ms. Muzi Quo [ph] from IR crew. Please go forward.

Unidentified Firm Consultant

Thanks, operator. Welcome to Phoenix New Media’s fourth quarter 2021 earnings convention name. I am joined right here as we speak by our Chief Government Officer, Mr. Shuang Liu; and our Chief Monetary Officer, Mr. Edward Lu.

On as we speak’s name, administration will first present a evaluation of the quarterly outcomes after which conduct a Q&A session. The fourth quarter 2021 monetary outcomes and webcast of this convention name can be found on our web site at ir.ifeng.com. A replay of the decision might be out there on the web site in just a few hours.

Earlier than we proceed, I might wish to refer you to our Protected Harbor assertion in our earnings press launch, which applies to this name as we are going to make forward-looking statements. Lastly, please observe that except in any other case acknowledged, all figures talked about through the convention name are in RMB.

With that, I want to flip the decision over to Mr. Shuang Liu, our CEO.

Shuang Liu

Thanks, Muzi [ph]. Hiya everybody and thanks for becoming a member of our name as we speak. Within the face of rising situation [ph] and macro uncertainties, we keep on the forefront of the media house, due to our sturdy media DNA and our mission to offer prime quality {and professional} information content material.

Throughout the previous few weeks, the Russia-Ukraine battle has captured the general public’s consideration. Beginning in mid-February. We have been the primary on-line media platform to launch full protection of the battle. Since then, our multi-dimensional protection of the disaster consisting of frontline updates from a community of Phoenix TV journalists, discussions, and evaluation from specialists in worldwide relations, video clips from content material creators in Ukraine, ongoing occasions, reside streaming, and extra has attracted a mean of 15 million day by day views throughout the web.

Apart from breaking information protection, we proceed to emphasise the distinctiveness of our content material and improve our person expertise. We stay dedicated to cultivating new enterprise initiatives and increasing our income streams. We have efficiently held numerous excessive profile signature occasions within the fourth quarter to increase our model affect regardless of restrictions and challenges associated to current COVID outburst.

Our potential to execute given a troublesome scenario is a results of our efficient teamwork, dedication, and creativity. A number of of those occasions embrace our iFeng meals pageant, along with a golden [indiscernible] Chinese language restaurant guys launch press convention. [Foreign Language]

Our iFeng Style Award [Foreign Language] and the finance, economics plummet [Foreign Language]. We upheld our excessive requirements for occasion ability, attendee expertise, and public wealthy.

Reside occasions have been huge success in assembly our demand in shoppers up flying advertising and marketing wants and set a brand new historic report in commercialization of our occasions and model publicity.

Along with these signature occasions, we launched an progressive program referred to as Inside Enterprise Faculties [Foreign Language]. We invited students, enterprise leaders, and almost a thousand college students from main MBA applications to go to the company campus of our shoppers. This system addressed matters similar to company improvement, {industry} transformation, and tax advances via a sequence of shows and roundtable discussions.

The MBA college students gained entry to enterprise case research. As we efficiently supplied our shoppers with precision advertising and marketing options to assist them entice excessive web value clients and help them in producing product gross sales. This occasion is only one of some ways we’re in a position to monetize our media model worth and our broad enterprise community and assets.

Whereas sustaining our offline occasion presence, we proceed to evolve our unique content material metrics. Within the fourth quarter, we quickly advance our editor segments, our worldwide information column, traits, [Foreign Language], printed in-depth commentary and day by day headline concerning worldwide relations, points, and occasions.

Having optimized the content material manufacturing course of, we noticed substantial enhancements in each the standard and amount of articles printed for the column, because the efficiency indicators of the column, together with views and click on via charges ranked among the many high tier information media shops.

The column is receiving widespread info from journalists, influencers, and the educational group from main Chinese language universities. Additionally via a joint efforts with different media firms [ph], we distributed international high information to worldwide markets, [technical difficulty] Our model recognition each at residence and overseas.

In the meantime, our [technical difficulty] commentary column referred to as the message perform [ph] is positioned to offer our viewers with a deeper perception and understanding of as we speak’s complicated world by overlaying trendy points and present occasions with vivid imagery, mental reasoning, and emotional emphasis.

Within the fourth quarter, the column reported a variety of social issues, together with the superstar social ethics, public administration points, ladies’s proper points, and evolution of taxation legal guidelines.

Since its launch, the column’s pageviews, person feedback, and new follower counts has all been [indiscernible] with an growing portion of this articles exceeding the 100,000 paid views. It’s a benchmark for digital — for visible recognition and publicity on WeChat.

On IP Convention entrance, we efficiently validated the monetization functionality of Your Achievements, an progressive quick video sequence that mixes giant scale area manufacturing with pet [ph] model shows. The sequence options a number of tremendous building initiatives and reviewed behind the scene challenges confronted by the development groups and creativity and expertise which will lead challenge worthwhile.

The manufacturing seamlessly aligned it is identical presentation of remodeling challenges into alternatives with our advertisers’ shiny picture, maximizing its content material distribution and attain. Throughout the fourth quarter, Your Achievement reached 22 million views via social media platforms throughout the web.

Apart from retail sequence, our IP manufacturing additionally developed livestream present specializing in interviews and discussions of trending cultural matters. For instance, we invited friends, similar to bestselling authors and manufacturing groups of widespread drama and films into our studio to speak about their work. The present acquired a extremely engaged person base, as followers of those creative works are eager to work together with our friends via the medium of reside streaming.

The present is reside streamed on our iFeng APP, in addition to different social media platforms, spreading virally and producing on-line dialogue. Via a mixture of our offline occasions and on-line content material, now we have fashioned a constructive suggestions loop, which permits each elements of our enterprise to collectively create worth, allow us to supply a top quality multi-channel expertise to all our clients.

On the product facet, iFeng APP continues to energy distribution of our on-line contents and offline occasions. Throughout the quarter, we made a number of updates to additional enhance the APP’s person expertise. For instance, we improved our algorithm to reinforce distribution effectivity for our quick reader content material, which noticed measured improve person attain, penetration price, and click-through price.

In comparison with final quarter, our quick media content material common viewing time elevated by 14% and penetration price grew by over 10% through the fourth quarter of 2021. In the meantime, we’re additional enhancing the interactive options of our APP, together with boards and reside chat, that are straight built-in with trending matters.

By encouraging our customers to take part in textual content or audio discussions, after viewing their matter pursuits, they are going to spend extra time on APP and proceed to discover it. This creates a way of group in addition to improve our person engagement and the enhance person stickiness. All of our arduous work in content material creation and enhancing our expertise has laid the inspiration for us to make strong progress in diversifying our income.

In on-line studying segments, we proceed to monetize our unique content material IP. We accomplished the sale of the film rights of Wheel of Time, [Foreign Language]. One among our unique actuality theme works of on-line fiction. As well as, on the finish of December 2021, we began laying the groundwork to export our on-line literature content material to abroad markets. As of as we speak, now we have constructed a library of English titles in a whole bunch, able to be monetized.

As for e-commerce, we proceed to develop merchandise for our non-public label manufacturers within the well being and wellness segments. Within the fourth quarter of 2021, we launched nutritious, low calorie meal replacements that includes widespread superfood components, benefiting from the site visitors from third-party reside streaming platforms, and personal vertical channels.

We drove this product into the highest promoting lists of this class, amongst lunch. For tradition and creativity, we associate with IP licensing corporations to carry rigorously crafted artwork and cultural objects from a few of the world’s main museums and gallery to our e-commerce stage.

Going ahead, we plan to make the most of the pure synergies between e-commerce and accountant similar to well being, vogue, and our newly developed tradition, reside streaming to combine content material themes with merchandise choice, and capitalize on our person site visitors.

Lastly, we positively tailored our reasonable vertical to the difficult macro atmosphere regardless of the market downturn. On one hand, we proceed to train our media affect in the true property sector to ship unique content material, launch particular occasions. We launched a brand new column specializing in the {industry}’s movers and shakers, and we held our {industry} summit within the fourth quarter, that includes scorching matters similar to city renew, land provide, sector debt ranges, on the governance suite redline coverage for actual property builders.

Along side occasions, we additionally publish industry-wide papers, particularly concerning ESG improvement and {industry} dynamics in the true property sector. Alternatively, our actual property crew reamed energetic in exploring new enterprise alternatives through the fourth quarter by addressing buyer ache factors and advertising and marketing wants, whereas making use of new monetization fashions past conventional promoting. Because of this, we obtain new breakthroughs in buyer acquisition and enhance our income combine.

To summarize, we demonstrated vitality resilience throughout difficult instances within the fourth quarter as we proceed to host excessive profile signature occasions, create unique and unique content material, improve our content material distribution applied sciences, and discover new enterprise initiatives.

Throughout the fourth quarter, we proceed to observe and plan for exterior challenges as we execute our technique of income diversification and enterprise development. We began 2022 with renewed dedication to beat near-term challenges and construct a thriving enterprise in quickly altering macro atmosphere.

With that, I am going to flip the decision to our CFO, Edward Lu to offer a more in-depth look into our quarterly financials.

Edward Lu

Thanks, Shaun and thanks all for becoming a member of our convention name as we speak. Our complete revenues within the fourth quarter of 2021 have been RMB302.9 million as in comparison with RMB362.2 million in the identical interval of final 12 months, hitting the excessive finish of our beforehand introduced steerage vary.

To supply some further shade on our revenues, web promoting revenues within the fourth quarter of 2021 have been RMB279.2 million in comparison with RMB336.7 million in the identical interval of final 12 months. The lower was primarily because of the discount in promoting spending of advertisers in sure industries. The intensified industry-wide competitors and the unfavorable affect of the COVID-19 outbreak in sure areas in China within the fourth quarter.

Paid companies revenues within the fourth quarter of 2021 have been RMB23.7 million in comparison with RMB25.5 million in the identical interval of final 12 months. Revenues from paid content material within the fourth quarter of 2021 have been RMB7.9 million in comparison with RMB11.2 million in the identical interval of final 12 months, primarily because of the discount in content material spending of sure clients.

Revenues from e-commerce and others within the fourth quarter of 2021 elevated by 10.5% to RMB15.8 million from RMB14.3 million in the identical interval of 2020. Loss from operations within the fourth quarter of 2021 was RMB53 million in comparison with loss from operations of RMB28.8 million in the identical interval of final 12 months.

Working margin within the fourth quarter of 2021 was unfavorable 17.5% in comparison with unfavorable 8% in the identical interval of final 12 months. Non-GAAP loss from operations within the fourth quarter of 2021 was RMB51 million in comparison with non-GAAP loss from operations of RMB3.3 million in the identical interval of final 12 months. Non-GAAP working margin within the fourth quarter of 2021 was unfavorable 16.8% in comparison with unfavorable 0.9% in the identical interval of final 12 months.

Web loss from persevering with operations attributable to iFeng within the first quarter of 2021 was RMB35.4 million in comparison with a web earnings of RMB434.8 million in the identical interval of final 12 months. Non-GAAP web loss from persevering with operations attributable to iFeng within the fourth quarter of 2021 was RMB33.2 million in comparison with RMB8.2 million in the identical interval of final 12 months.

Transferring on to our stability sheet, as of December thirty first, 2021, the corporate’s money and money equivalents, time period deposits, short-term investments, and restricted money have been RMB1.51 billion or roughly $237.5 million.

Lastly, I might like to offer our enterprise outlook for the primary quarter of 2022. We’re forecasting complete revenues to be between RMB172 million and RMB187 million. For web promoting revenues, we’re forecasting between RMB158.5 million and RMB178.5 million. For paid service revenues, we’re forecasting between RMB13.5 million and RMB18.5 million.

In abstract, whereas the uncertainty from the current macro circumstances and the altering {industry} panorama persists, we stay optimistic that inexperienced shoots will emerge. We’re assured in our content material creation and the distribution capabilities and consider that this aggressive differentiators will sharpen our market place within the face of ongoing industry-wide competitors as we go ahead.

Trying forward, whereas remaining prudent in our investments, we are going to examine new monetization methods and enhance our income combine, we’re satisfied that we’re on the trail to ship shareholder returns in the long term.

This concludes the ready portion of our name. We are actually prepared for questions. Operator, please go forward.

Query-and-Reply Session

Operator

Thanks. [Operator Instructions]

First questions comes from the road of Xueru Zhang from 86Research. Please go forward.

Xueru Zhang

Good morning administration. Thanks for taking my query. I’ve one query concerning our enterprise. We all know that 2022 is a tricky 12 months for the markets. And questioning do you additionally observe the challenges from macro conflict regulation in your advert enterprise as nicely? And is there something we are able to do to offset affect? Thanks.

Edward Lu

Hello Xueru, that is Edward. I’ll reply this query. Truly our model promoting enterprise revenues did face challenges because of the market downturn within the fourth quarter of 2021. In some industries, similar to autos and actual property, shoppers are very cautious with their promoting spending. Additionally, we often maintain extra offline actions and occasions within the fourth quarter, which have been affected by the nationwide COVID-19 outbreaks.

Although we overcame many challenges and efficiently held our signature occasions, such because the finance and financial summit, and meals pageant, we nonetheless have some initiatives being delayed and even canceled, sadly.

In 2022, I feel the macro atmosphere remains to be unsure. Nevertheless, if we check out the pattern of promoting demand, advertisers pay extra consideration to precision advertising and marketing. It is because cell web site visitors development has picked.

Now, advertisers focus extra on complete and IP content material than fragmented content material and the short-term consideration. So, we are going to proceed to strengthen our differentiation in — I feel within the following methods. First, we are going to proceed to reinforce our media model worth, via information protection on signature occasions, unique content material and enormous scale occasions planning. We are going to combine and distribute reside content material via reside streaming video and different types of media. So, we are able to create distinctive advertising and marketing assets for our shoppers.

Additionally, now we have now we have distinctive strengths in offering worldwide advertising and marketing options. Now we have a wide range of assets, the creator of our [indiscernible] sequence issues international — observer group, both skilled usually situated around the globe or abroad influencers.

They’ve efficiently created a video content material to assist home advertisers promote their manufacturers globally. Over worldwide IP such because the excessive finish discussion board, dialogue with the work, [Foreign Language] is extensively endorsed by our advertisers. We’re additionally constructing our affect and distribution capabilities overseas by rising our presence on the abroad social media platforms.

Our — additionally our collaboration with Phoenix TV may also enable us to combine bulk measurement advertising and marketing and advertiser assets and complement one another. This may allow us to create a complete advertising and marketing resolution that covers web and TV audiences.

Collectively, we are able to additional attain and entice new shoppers similar to central and the state-owned enterprises. We hope to create higher worth for our shoppers and enhance our monetization effectivity via this effort. Thanks, Xueru.

Xueru Zhang

Thanks. That is very useful.

Edward Lu

Thanks.

Operator

Thanks to your questions. Subsequent questions comes from Alice Tang of First Shanghai. Please go forward

Alice Tang

I obtained two questions on my finish. So, the primary one is, our firm has talked about numerous income streams over the previous few quarters many instances. So, might you please discuss in regards to the firm’s progress in companies segments?

Shuang Liu

Hello, I’ll take this one. Truly on our on-line studying and e-commerce revenues, each grew in 2021. For on-line studying, now we have reorganized our crew and recruit extra skilled expertise. We additionally improved the core competency of our IP content material and created numerous monetization channels, together with recording and promoting audio books, producing and distributing quick type video sequence, and promoting movie rights. We anticipate revenues from these segments to proceed to develop sooner or later.

When it comes to our studying app, we entice new customers by providing free prime quality e-books and earn income via promoting. We anticipate its income to scale up within the subsequent few years.

For our e-commerce enterprise, we centered on positioning ourselves because the go-to platform for tradition and the home product, leveraging third-party platforms similar to TikTok, and Crenshaw. Our non-public label model has achieved significant development in GMV on these third-party platforms.

I feel as we proceed to create extra unique content material, our followers and affect on third-party social platforms additionally grew. We’re nonetheless engaged on the way to flip our growing variety of followers into our e-commerce customers. We hope this rising site visitors can enhance our e-commerce enterprise development in future. I hope I’ve answered your query.

Alice Tang

Sure, thanks very a lot. So, my subsequent query is so by the top of the 12 months 2021, the corporate nonetheless had about RMB1.5 billion in money reserves. So, does the corporate has any funding plans for these money sooner or later?

Shuang Liu

Hello, that is Shuang, let me take your query. We’re lucky to have enormous amount of money readily available. It is about RMB1.5 billion, you are proper. I feel we’re fortunate to have this amount of money, particularly given the present market situation. It’s a really unstable market, we skilled panic promoting final night time. This amount of money will make us extra prepared, unbiased and stronger for future problem and to allow us to navigate the turbulent waters.

Just because now we have this amount of money doesn’t essentially imply that we might — we ought to be extra aggressive to take a position. I feel on the present stage, we have to be extra prudent, extra conservative in spending it earlier than we determine what’s occurring, earlier than we clearly analyze the concrete affect of those uncertainties can have on our enterprise, our monetary prospects perspective. So, within the close to future, I feel we might be extra cautious in making investments. That is it.

Alice Tang

Thanks.

Operator

Thanks for the query. Now we have no extra questions from the road. I want to hand the decision again to the administration for closing.

Unidentified Firm Consultant

Thanks operator. Now we have come to the top of our Q&A bit and our convention name. Please be at liberty to contact us if in case you have any additional query. Thanks for becoming a member of us as we speak on this name. Have an excellent day.

Operator

This concludes as we speak’s convention name. Thanks for collaborating You could now disconnect.



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